Canadians are flocking to universities and colleges for post-secondary education, but too many are choosing to pursue degrees in careers that aren’t in demand and don’t pay well, according to a new research paper from CIBC World Markets.
The paper, authored by Benjamin Tal and Emanuella Enenajor, found the proportion of adults in Canada with a post-secondary education is the highest among all Organisation for Economic Co-operation and Development (OECD) countries.
On the flip side, the share of Canadian university graduates who make less than one-half the median income is the largest among all OECD nations.
So what’s happening?
It’s pretty straightforward, according to Tal and Enenajor.
“Most Canadians are aware that, on average, your odds to earn more are better with a degree in engineering than a degree in medieval history,” they wrote. “But it’s not clear that students, armed with that knowledge, have been making the most profitable decisions. With the exception of commerce, in the last 10 years we haven’t seen a meaningful influx of students into degrees with more advantageous earnings outcomes.”
The authors offered up some speculation as to why so many students were pursuing degrees in the arts — 45 per cent of recent grads had degrees in fields such as psychology, humanities, social sciences and education — when they are aware there isn’t a pot of gold at the end of the rainbow.
Ability and motivation could be one factor. Engineering and science degrees are certainly challenging.
“As well, the joy of learning a less-technical subject, rather than a focus on potential future earnings, could be driving the continual increase of students in relatively low-paying fields of study,” said Tal and Enenajor.
Plus, more women are choosing to pursue post-secondary education — and females are “disproportionately represented” in arts and social sciences, they said.
But this pursuit of happiness isn’t helping employers find workers with the skills they need. It’s leading to an excess of post-secondary graduates in low-paying fields and a skills shortage in high-paying fields.
“That excess supply is largely due to the relatively large concentration of graduates in less financially advantageous fields,” the report states. “In many fields with a higher return on education, Canada is experiencing a significant shortage of supply.”
Encouraging students to choose in-demand degrees
How can students be convinced to abandon the arts and pursue the sciences? The authors propose a combination of “developing an information infrastructure system designed to identify emerging trends in labour market needs, improved quality and equity of learning opportunities, increased resources, improved system efficiency and increased private investment, in part, in the form of corporate investment.”
The report also calls for “much simpler and efficient” recognition of credentials for new immigrants, pointing out that a worker with a bachelor’s degree in commerce earned overseas earns 40 per cent less than the same degree in Canada. For engineering, the gap is 70 per cent.
Canadians with a bachelor degree certainly earn more on average than someone who has a high school diploma. But the premium varies widely. Here’s a run-down of some common degrees, and the wage premium attached to BA versus a high school graduate:
Math, comp & phys sci
Fine & applied arts
Source: Statistics Canada/CIBC
© Copyright Canadian HR Reporter, Thomson Reuters Canada Limited. All rights reserved.